Megahits Raise Brows Amid Sagging Rentals

The video rental market’s first quarter is shaping up as a first-class paradox, with rental transactions down but shipments of product to dealers up. Consumers rented 7% fewer vids in the first quarter of 1991 than during the same period in 1990, according to research firm Alexander & Associates.

Despite the drop in consumer rentals, shipments of major rental releases totaled a record 8.7 million units, worth more than $535 million to suppliers during the quarter, based on data provided by suppliers and by Tape Track, a service of Video Week/Video Store (VARIETY, April 15).

Amy Innerfield, v.p./general manager of Alexander & Associates’ Video Flash service, reported consumers rented 79.1 million cassettes per week in the first quarter of 1991, compared with 85 million per week in the same period in 1990.

One studio exec said the high shipment figures and low rental turns mask an industrywide problem: “The shipments on lead titles were up, but the lesser titles did very much worse. Overall, it just netted out better.”

Louis Feola, exec v.p. at MCA/Universal Home Video, cautioned that buying deep on hits and shallow on secondary titles may be a recipe for retail disaster.

The boost in shipments may indicate that many dealers were flush with capital from the fourth-quarter sell-through season. But the impact of slower rentals may be felt this quarter, said Innerfield, when retailers are under-capitalized to buy sufficient quantities of new releases.

Per Tom Manuel, owner of Cagney’s Video in Peabody, Mass., “What’s happening is because this has become a new-release-driven industry, customers come in now and don’t go to any shelf except the new-release shelf.”

Top rentals nationally during the quarter, according to Innerfield, included Buena Vista’s “Pretty Woman” (29 million rental transactions), Live’s “Total Recall” (15.7 million) and CBS/Fox’ “Die Hard 2″ (14.5 million). Several, including the top two, were released in fall 1990.

The first quarter is traditionally a strong time for video rentals, but Innerfield pointed to such factors as the Persian Gulf war.

Andy Burton, president of the seven-store chain Movies-To-Go in Iowa, said rental activity was off 10% in his older stores during the war.

Another industry exec cautioned that the rental decline stems from many vidstore owners failing to refine their business strategies, now that homevid has lost its novelty.

Danny Kopels, exec veep of distribution for VPI/Harmony and a lecturer for Commtron on retailing issues, said, “The problem is that you have people operating videostores on a gut level, and they don’t really know what’s going on there.”